Qualcomm Buys NXP

The transaction, scheduled to close at the end of the 2017, could make Qualcomm a leader in RFID chip sales for IoT, cellular, automotive, transportation, payments and other applications.
By Claire Swedberg

Neither company would speak directly to the role that RFID plays in the acquisition, but both firms sell NFC-based products. Qualcomm's subsidiary Qualcomm Atheros, for instance, sells NFC reader chips used in mobile devices, while Qualcomm's Snapdragon processor for mobile devices comes with NFC support provided by NXP reader chips.

NFC reader chips can be found in both Android and iOS smartphones and tablet PCs. Apple's newer smartphones, for example, now support Apple Pay (an NFC-enabled payment service), for which NXP has supplied such chips. "Within the domain of cellular, NFC would be a diversification beyond their existing modem chips," speculates Bill McBeath, ChainLink Research's chief research officer.

With the purchase of NXP at $110 per share, Qualcomm says it hopes to leverage its acquisition's products and development to provide solutions in the automotive sector—for secure access, safety and infotainment; mobile for 3G and 4G modems, as well as security; and Internet of Things solutions, such as mobile transactions, payment cards and transit systems.

In addition to diversification, the acquisition enables Qualcomm to grow further in areas in which it already has traction. "The combined company will have technology leadership in strategically important areas," the Qualcomm spokesperson reports, "including leading positions in mobile, automotive, IoT, security and networking."

The companies together expect to yield annual revenues of $30 billion, and to have serviceable addressable markets of $138 billion in 2020. Within two years, Qualcomm anticipates achieving $500 million in annual cost savings as well.

The acquisition is slated to close at the end of 2017. Until then, says Joon Knapen, NXP Semiconductors' global communications head, NXP will continue to operate as a standalone company.

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